G/SG/N/7/MAR/4  
G/SG/N/11/MAR/7  
4 October  2019 
(19-6443) Page: 1/8 
Committee on Safeguards  Original:  French  
 
  
NOTIFICATION UNDER A RTICLE 12.4 OF THE A GREEMENT ON SAFEGUAR DS 
BEFORE TAKING A PROV ISIONAL SAFEGUARD  MEASURE  
REFERRED TO IN ARTIC LE 6 
NOTIFICATION UNDER  ARTICLE 9, FOOTNOTE  2, 
OF THE AGREEMENT ON SAFEGUARDS  
MOROCCO  
(Hot-Rolled Sheets)  
The following communication, dated 2 October 2019, is being circulated at the request of the 
delegation of Morocco.  
 
_______________  
 
 
Pursuant to Article  12.4 of the Agreement on Safeguards, Morocco hereby submits its notification 
before taking a provisional safeguard measure referred to in Article  6. 
As stated in WTO document G/SG/N/6/MAR/11, dated 29  May 2019, a safeguards investigation 
concerning hot-rolled sheets was initiated on 29  May 2019. This investigation was launched following 
the receipt by the Min istry of Industry, Investment, Trade and the Digital Economy (hereinafter the 
Ministry) of a petition filed by the domestic industry , on behalf of the domestic hot -rolled sheet 
industry, for the application of safeguard measures to imports of  hot-rolled sh eets. 
1. Product subject to the proposed provisional safeguard measure  
The products at issue are hot -rolled steel sheets, whether or not  in coils. The sheets referred to in 
the petition are imported into Morocco under the following Harmonized System tariff headings: 
72.08, 72.11.13, 72.11.14, 72.11.19, 72.25.30, 72.25.40, 72.26.20.00.11, 72.26.20.00.21, 
72.26.20.00.30, 72.26.20.00.40, 72.2 6.20.00.51, 72.26.20.00.52, 72.26.20.00.59, 72.26.91, 
72.26.99.90.91 and 72.26.99.90.99.  
2. Proposed provisional safeguard measure  
It is proposed to impose a provisional safeguard measure in the form of an additional ad valorem  
duty of 25%.  
3. Entry into force of the  provisional safeguard measure  
The provisional safeguard measure will enter into force on the day immediately following the date 
of publication, in Morocco's Official Journal, of the joint order imposing the measure. The measure 
has not yet entered into force.  
4. Expected duration of the provisional safeguard measure  
The provisional safeguard measure will be applied for 200 days from the date of its entry into force.  G/SG/N/7/MAR/4 • G/SG /N/11/MAR/7  
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  5. The basis for:  
(i)  Making a preliminary determination, as provided for in Article  6, that increased 
imports have caused or are threatening to cause serious injury.  
(a) Import trends in absolute and relative terms  
In absolute terms, imports of hot -rolled sheets rose by 44% during the 2014 -2018 review period, 
growi ng from 74,488 tonnes in 2014 to 107,213 tonnes in 2018.  
Following a significant increase between 2014 and 2015 , the share of imports in relation to domestic 
production of the like product fell in 2017 to a level below that of 2014, 2015 and 2016. However , 
this share grew significantly to 118 % in 2018 from 73 % in 2017.  
Table 1:  Hot-rolled sheet import trends in absolute and relative terms  
 
(Index: 2014=100)  2014  2015  2016  2017  2018  
Imports (tonnes)  74,488  128,576  128,408  81,542  107,213  
Imports/production (%)  100 155 109 73 118 
Source:  Data from the Foreign Exchange Board and the domestic industry.  
Accordingly, the Ministry's preliminary determination is that imports of hot -rolled sheets increased 
massively in both absolute terms and compared to domestic production.  
(b) Unforeseen developments  
The Ministry's preliminary finding is that the massive increase in imports of the product concerned  
result s from an unforeseen development that led exporting producers of the Mediterranean basin 
and China  with significant overcapacity in steel products to divert their exports to Morocco. 
Furthermore, the restrictive import measures applied by many large steel -consuming countries have 
restricted access to these markets  for exporting countries such as those in  Eastern Europe (Russia 
and Ukraine), for wh ich the Moroccan market remains easily ac cessible.  
(c) Serious injury or threat thereof  
Pursuant to the relevant provisions of the Agreement on Safeguards, in particular Articles  2.1, 4.1(a) 
and 4.2(a), the Ministry analysed the development of the following factors:  
 
Table 2:  Overview of indicators of injury to the domestic hot -rolled sheet industry  
 
(Index: 2014=100)  2014  2015  2016  2017  2018  
Volume of imports (tonnes)  74,488  128,576  128,408  81,542  107,213  
Rate of change in imports (%)  - 72.61%  -0.13%  -36.50%  31.48%  
Volume of production (Index)  100 112 160 153 123 
Share of imports in domestic production (Index)  100 155 109 73 118 
Market share taken by imports (%)  100 142 112 76 118 
Sales (tonnes)  100 98 123 128 96 
Captive consumption (tonnes)  100 130 194 190 152 
Productivity (tonnes/employee)  100 117 206 174 145 
Capacity utilization rate  100 112 160 153 123 
Profits and l osses (MAD thousand)  -100 -81 -5 15 -13 
Number of employees  100 96 78 88 85 
Source:  Foreign Exchange Board and data from the domestic industry.  
❖ Increase in imports: As indicated above, the volume of hot -rolled sheet imports 
increased massively between 2014 and 2015, and imports subsequently remained high 
with another massive increase  from 2017 to 2018. This increase is evident in both 
absolute and relative terms compared to domestic production. The rate of the increase 
in imports was also particularly high between 2014 and 2015 (+72.61%) and between 
2017 and 2018 (+31.48). Overall, imports rose by 44% between 2014 and 2018 , and 
continued to grow between 2017 and 2018, showing that the temporary drop in 2017 G/SG/N/7/MAR/4 • G/SG /N/11/MAR/7  
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  to a level nevertheless higher than in 2014, cannot call into question the general 
conclusion that the safeguard measure is justified by increased imports.  
❖ Market share taken by imports: The market share taken by imports rose sharply by 
42 index points between 2014 and 2015 . Imports then fell from 26.42% in 2015 to 
14.22% in 2017. However, the market share of imports experienced a considerable rise 
of 42 inde x points between 2017 and 2018. Accordingly, t his increase was accompanied 
by a fall in the market share of domestic production, indicating that the domestic 
industry once again lost sales volume to imports, despite efforts to recapture market 
share in 201 6 and 2017.  
❖ Sales: Following a rise between 2016 and 2017, sales in 2018 dropped by 42 index 
points compared to 2017 , and 24 points compared to 2016.  
❖ Production: Hot-rolled sheet production fell by seven points between 2016 and 2017 , 
and 30 points between 2017 and 2018, despite a rise of 12 points in 2015 and 60 points 
in 2016.  
❖ Productivity and employment: Productivity in the  hot-rolled sheet  industry  rose until 
2016 due to an increase in production and a reduction in the size of the workforce 
between 2014 and 2016 . However, it  subsequently fell by 32 points between 2016  and 
2017, and 29 points between 2017  and 2018 .  
(3) Production capacity utilization rate: During the investigation period, the production 
capacity utilization rate did not exceed that of 2016 (160 index points). The rate dropped 
steeply from 2017  onwards , and deteriorated most significantly between 2017 and  2018.  
❖ Profitability: The domestic industry obtained negative results1 in the 2014 -2016 period 
and in 2018. Profitability improved in 2016 and 2017, but deteriorated considerably in 
20182; the industry was able to develop in favourable conditions and make a passing 
profit, only to experience negative performance once again in 2018.  
❖ Employment: Domestic industry employment trends were unstable. Employment fell 
in the 2014 -2016 period, edged up in 2017, then fell again in 2018.  
In short, the analysis of vario us injury factors shows that the domestic industry 's situation  fluctuated 
considerably in the 2014 -2018 period. Several of the parties concerned pointed out that the domestic 
industry's situation was better  in 2018 than in  2014 and that, for this reason, t here could not be a 
"significant overall impairment" of its position.  
The domestic industry also deteriorated considerably between 2017 and 2018 when imports 
originated from sources not covered by anti -dumping measures. Between 2017 and 2018:  
❖ The domestic industry lost nine points in terms of market share;  
❖ Domestic industry sales fell by 34 points;  
❖ Domestic industry productivity fell by 30 points;  
❖ The domes tic industry's capacity utilization rate dropped by 30 points;  
❖ The domestic industry's profitability, which was already negative , fell by 28 points ; and  
❖ Employment in the domestic industry fell by three  points.  
                                                
1 The results were calculated on the basis of the difference between the cost price, including 
administrative, sales and general costs, and the sales price.  
2 In the investigation initiation report, the situation regarding profits and losses was determined on the 
basis of the gross operating surplus, which does not take into account administrative, sales and general costs.  G/SG/N/7/MAR/4 • G/SG /N/11/MAR/7  
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  The Ministry's preliminary finding is that the position of the domestic industry between 2014 and 
2018 shows that it is extremely frag ile. In particular , the Ministry finds that the considerable 
deterioration of the position of the domestic industry between 2017 and 2018 indicates the start of  
the industry's  significant overall impairment.  
(d) Causation  
The Ministry analysed the correlat ion between the increase in imports and the threat of serious 
injury, the conditions of competition between hot -rolled steel sheet imports and the product 
produced by the domestic industry, and the impact of factors other than the increase in imports that 
are likely to cause injury to the domestic industry.  
d.1.  Correlation between the increase in imports and the threat of serious injury  
As previously explained, the Ministry believes that domestic industry trends between 2014 and 2016 
must be differentiated from  those between 2017 and 2018.  
During the 2014 -2016 period, the domestic industry was recovering  thanks to the imposition of 
anti-dumping measures against hot -rolled steel sheet imports from the European Union and Turkey , 
and benefit ed from a rescue and recovery scheme that enabled it  to streamline its operations.  
The combined effect of these trade defence measures and the rescue and  recovery scheme helped 
the domestic industry develop in favourable conditions where the fall in prices was nevertheless not 
as substantial as the parallel fall in costs:   
Trends  2015/2014  2016/2015  
Local sales price (%)  -7.50%  -11.77%  
Production costs (%)  -15.43%  -26.41%  
Source:  Data from the domestic industry.  
However, the domestic industry could not take full advantage of this fall in production costs due to 
the increased level of imports.  
Imports rose by  85.4%, from 69,350 to 128,576 tonnes, between 2014 and 2015 , before stabilizing 
at 128,403 tonnes in 2016:  
 2014  2015  2016  
Imports (tonnes)  74,488  128,576  128,408  
Source:  Foreign Exchange Board.  
In terms of index  points , the domestic industry was able to benefit from a 32 -point rise in 
consumption between 2015 and 2016 and increase its market share by 18 points without a decrease 
in imports, despite a significant 10 -point loss in market share between 2014 and 2015:  
(Index: 2014=100)  2014  2015  2016  
Domestic consumption  100 122 154 
Captive consumption  100 130 194 
Imports (tonnes)  74,488  128,576  128,408  
Market share of imports (%)  100 142 112 
Domestic industry sales (tonnes)  100 98 123 
Market share of domestic industry (%)  100 90 97 
Source:  Foreign Exchange Board and data from the domestic industry.  
This approach enabled the domestic industry to increase its capacity utilization level and thereby 
ensure the viability of its operations:  
(Index: 2014=100)  2014  2015  2016  
Production (tonnes)  100 112 160 
Capacity utilization rate (%)  100 112 160 
Source:  Data from the domestic industry.  G/SG/N/7/MAR/4 • G/SG /N/11/MAR/7  
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  The domestic industry was nevertheless unable to  take full advantage of the decline in its production 
costs and remained in deficit :  
(Index: 2014=100)  2014  2015  2016  
Local sales price (MAD/tonne)  100 93 82 
Production costs (MAD/tonne)  100 85 62 
Profitability of the domestic industry  -100 -81 -5 
Source:  Data from the domestic industry.  
Therefore, the presence of increased imports on the Moroccan market during the 2014 -2016 period 
negatively impacted the domestic industry, contributing to its fragility by preventing it from raising 
its prices to level s high enough  to ensure the profitabil ity of its hot-rolled steel sheet sales.  
The year 2017 is an anomaly in the Moroccan hot-rolled steel sheet market. During this period, 
imports to Morocco fell, to the benefit of the domestic industry, thereby allowing the industry's 
profitability to impro ve slightly  while production costs rose more rapidly than Moroccan market 
prices:  
(Index: 2014=100)  Trends 2017/2016  
Local sales price (%)  25.38%  
Production costs (%)  34.39%  
Profitability (%)  383%  
Source:  Data from the domestic industry.  
The Ministry considers that the 2017 results show the domestic industry's capacity to become more 
competitive in the absence of excessive pressure on volume and prices from imports. For the reasons 
explained  above , the Ministry also finds that the 2017 reversal of the upward trend in imports was 
only temporary.  
Imports grew significantly between 2017 and 2018 as a result of the cumulative effect of 
overcapacity and increased protection in the main export markets, namely the United States and 
the European Un ion. This increase in imports coincided perfectly with the significant deterioration of 
all the domestic industry's injury indicators:  
 Trends 2018/2017  
Imports (%)  31% 
Production (%)  -19% 
Capacity utilization (%)  -19% 
Sales (%)  -25% 
Market share of the domestic industry (%)  -9.05%  
Profitability (%)  -185%  
Number of employees (%)  -3% 
Productivity (%)  -17% 
Source:  Foreign Exchange Board and data from the domestic industry.  
As such, the Ministry's preliminary conclusion is that there is a temporal correlation between the 
increase in imports and the threat of serious injury to the domestic industry. The increase in imports 
from 2014 to 2016 contributed to the domestic industry 's fragility by preventing the industry  from 
raising its prices to levels high enough to ensure its profitability. While the industry remained fragile 
despite a temporary decline in imports in 2017, imports once again rose between 2017 and 2018, 
causing th e domestic industry's injury indicators  to significantly deteriorate . 
The Ministry therefore considers that the current position of the domestic industry , which is 
characterized by imminent significant overall impairment indicative of a threat of serious injury , was 
caused by increased imports during the 2014 -2018 period . 
The Ministry's preliminary conclusion is that the domestic industry was faced with a threat of serious 
injury and that serious injury  would therefore be imminent if no safeguard m easure was taken 
against the negative impact of increased imports.  G/SG/N/7/MAR/4 • G/SG /N/11/MAR/7  
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  The fact that imports weakened the domestic industry in the 2014 -2016 period, combined with 
parallel trends in imports and injury indicators in the 2017 -2018 period, shows a clear temporal 
correlation between the increase in imports and the threat of injury to the domestic industry.  
d.2.  Effect of other factors  
d.2.1.  Contraction in demand or changes in patterns of consumption  
According to the investigation's preliminary data, domestic consumption rose between 2014 and 
2016 before falling by 22 index points between 2017 and 2018. Despite the decline in domestic 
consumption in 2018, the market share of imports increased to the de triment of the market share 
of the domestic industry, which fell by nine points between 2017 and 2018:  
(Index: 2014=100)  2014  2015  2016  2017  2018  
Domestic consumption  100 122 154 144 122 
Captive consumption  100 130 194 190 152 
Imports (tonnes)  74,488  128,576  128,408  81,542  107,213  
Market share of imports (%)  100 142 112 76 118 
Domestic industry sales (tonnes)  100 98 123 128 96 
Market share of the domestic industry  100 90 97 105 96 
Source:  Data from the Foreign Exchange Board and the domestic industry.  
As regards domestic consumption, certain parties concerned highlighted in their comments that the 
drop in demand between 2017 and 2018 had caused a fall in domestic industry production and that 
therefore the injury caused by the drop in consumption between 2017 and 2018 should be taken 
into account.  
However, the Ministry wishe s to emphasise that this drop in consumption was accompanied by a 
significant increase in imports, which consequently captured a considerable market share. In this 
context, the decline in consumption is a not a factor capable of breaking  the causal link between the 
increase in imports and the threat of injury to the domestic industry.  
d.2.2.  Trends in domestic prices and production costs of the like or directly competitive 
domestic product  
The data available to the Ministry3 shows that the domestic industry's intrinsic production costs are 
competitive in regional terms, by  global standards and taking into account  the capacity utilization 
rate of the domestic industry, which is limited by the increased presence of imports on the 
Moroccan  market.  
The data shows a certain correlation in upward and downward trends between sales price s and 
production costs:  
(Index: 201 4=100)  2014  2015  2016  2017  2018  
Local sales price  100 93 82 102 112 
Production costs  100 85 62 84 95 
Source:  Data from the domestic industry.  
Consequently, trends in domestic prices and production costs of the like or directly competitive 
domestic product cannot be considered a factor of serious injury or threat of serious injury. On the 
contrary , as explained  above , with imports increas ing, the domestic industry could not fully benefit 
from the fall in costs during the 2014 -2016 period, and was obliged to refrain from fully reflecting 
its rise in costs during the 2017 -2018 period.  
                                                
3 The preliminary examination of the domestic industry's responses to the investigation questionnaire.  G/SG/N/7/MAR/4 • G/SG /N/11/MAR/7  
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  d.2.3.  Competition between domestic producers  
The domestic industry is m ade up of a single Moroccan producer of hot -rolled steel sheets and 
therefore does not face any competition from any other domestic producer.  
d.2.4.  Technological developments  
According to the preliminary findings4, the domestic industry is equipped with recogniz ed reference 
technological machines and tools . The technology used ensures that its production of steel sheets 
meets quality standards and international standards.  
The Ministry therefore considers that the technologies used by the domestic industry are not likely 
to cause or threaten to cause serious injury.  
d.2.5.  Export performance of the domestic industry  
Like domestic sales, domestic industry exports also dropped in 2018 compared to 2017 , in this case 
by 31%.  Despite this fall in 2018, exports had amounted to only 10% of domestic production in 
2017; in 2018, they amounted to  7.85%.  
(Index: 2014=100)  2014  2015  2016  2017  2018  
Exports (tonnes)  100 118 338 645 376 
Exports ( MAD thousand)  100 108 237 508 350 
Exports in relation to production  100 105 211 421 304 
Source:  Data from the domestic industry.  
d.2.6.  Changes in  domestic industry  productivity  
The productivity of the domestic industry's p roduction line s is consistent with standards , and their 
underactivity is linked to the flood of imports entering the domestic market :  
(Index: 2014=100)  2014  2015  2016  2017  2018  
Number of employees  100 96 78 88 85 
Productivity (tonnes/employee)  100 117 206 174 145 
Source:  Data from the domestic industry.  
Due to the continued presence of imports on the Moroccan market, the industry could only fully 
utilize its producti on capacity in 2016 and 2017. The increase in imports between 2017 and 2018 
adversely impacted domestic industry opportunities in the domestic market, causing indexed 
capacity utilization to  fall below the 153 mark to 123.  
This under activity caused by increased imports impacted the productivity of the domestic industry . 
However , the change in  productivity itself reflects the threat of serious injury related to  increased 
imports. As seen over the 2017 -2018 period, the increase in imports forced the domestic industry 
to significantly decrease production and, to a lesser effect, its workforce. Therefore, the productivity 
of the domestic industry was adversely affected by this increase  in imports.  
CONCLUS ION CONCERNING THE C AUSAL LINK  
In light of the above, the Ministry's preliminary conclusion is that there is a causal link between the 
massive increase in imports of hot -rolled sheets and the threat of serious injury to the domestic 
industry. This causal l ink is not affected by the existence of other factors of injury , especially as 
none of these factors are likely to cause injury to the domestic industry in the near future, and 
therefore do not  contribute to the threat of serious injury established on a preliminary basis by the 
Ministry.  
                                                
4 Based on the preliminary examina tion of the domestic industry's responses to the investigation 
questionnaire.  G/SG/N/7/MAR/4 • G/SG /N/11/MAR/7  
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   (ii) Determining the existence of critical circumstances where delay would cause 
damage which it would be difficult to repair  
According to data from the Foreign Exchange Board, hot -rolled sheet imports in the 
Januar y-July 2019 period  amounted to around  79,371 tonnes, which represented over 74% of the 
total volume imported in 2018, and were priced at an average of MAD 7,000 per tonne, an amount 
significantly lower than the average price of MAD 7,428.7 per tonne  in 201 8. This implies that 
pressure on the domestic industry in terms of volume and price rose after the investigation period, 
causing  the industry's position – already extremely fragile and impaired  in 2018 – to suffer significant 
overall impairment in 2019.  
The investigation's preliminary data shows that imports will continue  to increase in the future,  which 
risks further aggravating  the injury caused to the domestic industry. I t should be noted that : 
❖ the steel sector is suffering from an overcapacity problem that most notably affects 
hot-rolled steel sheets. Some of the overcapacity is offloaded onto export market s in 
order to maintain an adequate level of capacity utilization. There is a genuine and 
established risk that part of the overcapacity may be directed into the Moroccan market, 
as established earlier in respect of imports from Egypt, Italy and China, for instance ; 
❖ many States, particularly the United States and the European Union, have adopted  
measures restricting imports of hot -rolled steel sheets. These measures have disrupted 
traditional trade flows and forced some exporters to redirect exports into other more 
open markets such as Morocco. There is a genuine and established risk that part of  the 
exports traditionally destined for certain markets that are now protected, in particular 
the United States and the European Union, may be redirected into the Moroccan market, 
as established earlier in respect of imports from Russia and Ukraine , for in stance . 
6. Offer of consultations under Article 12.4  
In accordance with Article  12.4 of the Agreement on Safeguards, Morocco is ready to enter into 
consultations on the provisional safeguard measure with those Members having a substantial interest 
as exporter s of the products concerned.  
7. Developing Members exempt from the measure in accordance with Article 9.1 of the 
Agreement on Safeguards  
In accordance with the requirements governing special and differential treatment for developing 
country Members of the WTO, laid down in Article  76 of Law No.  15-09 and Article  9.1 of the 
Agreement on Safeguards, the proposed additional duty will not apply to imports of hot -rolled sheets 
originating in the following developing countries or customs territories that are Memb ers of the 
WTO5: Albania; Angola; Antigua and Barbuda; Argentina; Armenia; Bahrain, Kingdom of; 
Bangladesh; Barbados; Belize; Benin; Bolivia; Botswana; Brazil; Brunei Darussalam; Burkina Faso; 
Burundi; Cabo Verde; Cambodia; Cameroon; Central African Republ ic; Chad; Chile; Colombia; 
Congo; Costa Rica; Côte d'Ivoire; Cuba; Democratic Republic of the Congo; Djibouti; Dominica; 
Dominican  Republic; Ecuador; El Salvador; Fiji; Gabon; Gambia; Georgia; Ghana; Grenada; 
Guatemala; Guinea; Guinea Bissau; Guyana; Haiti ; Honduras; Hong Kong, China; India; Indonesia; 
Jamaica; Jordan; Kenya; Korea, Republic of; Kuwait; Kyrgyz Republic; Lao People's Democratic 
Republic; Lesotho; Macao, China; Madagascar; Malawi; Malaysia; Maldives; Mali; Mauritania; 
Mauritius; Mexico; Moldo va, Republic of; Mongolia; Montenegro; Mozambique; Myanmar; Namibia; 
Nepal; Nicaragua; Niger; Nigeria; Oman; Pakistan; Panama; Papua New Guinea; Paraguay; Peru; 
Philippines; Qatar; Rwanda; Saint Lucia; Saint  Kitts and Nevis; Saint Vincent and the Grenadine s; 
Samoa; Saudi Arabia, Kingdom of; Senegal; Sierra  Leone; Singapore; Solomon Islands; 
South  Africa; Sri Lanka; Suriname; Swaziland; Chinese Taipei; Tajikistan; Tanzania; Thailand; 
The Former Yugoslav Republic of Macedonia (FYROM);  Togo; Tonga; Trinidad an d Tobago; Tunisia; 
Uganda; United  Arab Emirates; Uruguay; Vanuatu; Venezuela, Bolivarian Republic of; Viet Nam; 
Yemen; Zambia; Zimbabwe.  
__________  
                                                
5 For the purposes of the exemption of developing countries under Article 76 of Law No. 15 -09, 
the 3% threshold was calculated on the basis of the most recent import data availab le from the MDCCE, 
namely the cumulation of imports from January to July 2014.